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Changes in Payments to Physicians 1 (June 2011)

handle is hein.congrec/cbo08029 and id is 1 raw text is: Medicare's Payments to Physicians: The Budgetary Impact of Alternative Policies The Congressional Budget Office (CBO) projects that, under current law, payment rates for physician services will be reduced by 29.4 percent in 2012. That large reduction called for under current law follows several years of legislative action to either maintain or increase physician payment rates under the Medicare program when those rates were otherwise scheduled to decrease under the provisions of law known as Medicare's Sustainable Growth Rate (SGR) mechanism. Such legislative actions have overridden the SGR. Two types of SGR changes-often called the clawback and the cliff'-have been enacted since the Congress began overriding scheduled reductions in physician payment updates in 2003 (see the appendix for a description of such provisions). Analysts have also discussed a 10-year freeze in payment rates. Figure 1 compares federal spending for physicians' services in Medicare under illustrative options-for those three types of SGR changes-with the amount of such spending in CBO's current-law baseline. (The CBO baseline assumes no further legislative changes, allowing the SGR mechanism to operate as it is currently in law.) The red notched line in Figure 1 represents CBO's projection of spending under the March 2011 baseline. Options 1, 2, and 3 show the effects of a cliff policy following a one-year freeze (solid blue line), a clawback policy that would freeze payment rates in 2012 by overriding the current cliff and then use the SGR mechanism to recapture spending during the next several years (dotted black line), and a 10-year freeze that would set payment rates at the 2011 level through 2021 (dashed blue line). Tables 1 through 3 provide several variations of each option; the path of spending would be similar to the illustrative example in Figure 1 for the same type of option (clawback, cliff, or 10-year replacement of the SGR mechanism). Figure 1 Baseline Spending and Selected SGR Options $160 00P 00 $120 00 S$80 $40 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Baseline Physician Spending - Option 1: 2012 freeze, cliff ****** Option 2: 2012 freeze, clawback - - Option 3: 10-year freeze